no more packing capacity

[rusty1]

We need to start a LOUD protest against more packer capacity. We don't need just more capacity, we NEED another buyer on the block with it. IN other words we need MORE CAPACITY WITH A NEW FACE!!!

[grassfarmer]

Absolutely agree with that - was discussing that with my NFU rep who agreed but was waiting until something has actually been announced. Despite the talk at Stampede is their actually a proposal to increase capacity? or is it just vague talk the same as ABP are putting out how our heroic friends the packers are constantly expanding their weekly kills. I am amazed at Arno's statement in the letter to beef producers in the Alberta Beef Mag. when he is pointing out that kill capacity is the problem not finding markets for our beef "beef products are being sold into 23 markets across north america and around the world for acceptable prices" Acceptable prices for who ? the packers? This clown should be removed from his post - lets get to it.

[cowman]

The problem is we need packing capacity now...not two years down the road? Specifically, we need cow capacity? How long can we keep the old culls? They are like a time bomb digging us a little deeper everyday!
We need another cow plant right now. If not, we can continue to expect the prices that Bombay got...or even lower! I mean 5 cents???
The other solution would be the pit, but we all know that isn't going to happen! However I believe that has been happening on a small basis? Old cow, maybe lame or has a bad eye? Cheaper to shoot her than haul her to town! And meanwhile the price of hamburger and stew meat hangs right in there! Something isn't quite right here? How can our cow be worth nothing and yet she comes out the other end at pre BSE prices? Has a Big Mac gotten any cheaper? How about a Subway sandwich? I suspect the meat in both is about the cheapest ingredient!

[cowman]

Just remembered something my Dad told me. When he was a boy in the thirties they sent some old cows to Burns in Calgary. They drove them into the railyards and loaded them on the cars. Instead of a check they got a bill! The cows never brought enough to pay the freight!
The next year my grandfather just took the old cows and shot them and let the pigs eat them! My Dad said these pigs lived in a big bushy pasture and were wild and ferocious!

[rusty1]

Coweman - My point is if Nelsons/IBP/Cargill were to build the plant - you'd still get only $0.05. And our political heads of all lobby groups don't want to admit that nor do they want to do anything else to help producers or a 4th. party build one. So if you and the rest of producers don't put some REAL effort into this issue you spok of you won't be any better off. Instead you'll be worse off. So lets cut the retoric and open up the wallets and do something about it.

[nerves]

Funny you should mention that my dad and I had that same discussion last winter. He said what ever died horses or cows went to the pigs it was better than feeding the predators.(I guess value adding even went on in the thirties, how about that)

[BFW]

Clearly we need to get away from the notion that all our problems will disappear if we can get the border open. In fact, I think an argument can be made that it will be in the industries long term best interests for the border to remain closed to live cattle for an extended priod of time. Hard medicine, but will make new investment in processing infrastructure much more attractive if the excess American capacity is taken out of the equation in the short term and maybe even permanently in the Pcific Northwest. Of course this probably involves a cull animal disposal program and significant support from government to the rancher while the capacity comes online. I know this sounds radical but I think it needs to be seriously looked at by the powers that be as a possible long term solution to our problems.

[cswilson]

Have u ever seen a chicken wander into a pigpen not pretty-they used to have an assembly yard here and some guy loaded a few sheep in with a deck of hogs. When they got to plant all that was left was wool.

[kato]

The fellows who are trying to get Rancher's Choice going have been slugging away for a long time now.

They were encouraged and egged on by the government. The same government that now says it won't commit to the project because it won't be profitable. (Not just provincial either, federal too.)

So out of one side of their mouths they are spouting off about how much they want to support the industry. And out of the other side they are telling us it's a waste of time to even try.

If they weren't going to stand behind it, then why the h%^$# didn't they say that in the first place?

Because they were just killing time, and dodging criticism, hoping that the border would open and they wouldn't HAVE to do anything.

With all the tax breaks, forgiveable loans and bad loans (that they don't bother trying to collect) that is handed out to big business, why on earth is there no support for the little guy?

Since the odds of the border opening to cows in the near future is very very slim, we would be crazy not to build cow slaughter facilities. These cows are going to be cheap for a long time to come, and we need a way to move them.

[rusty1]

Just talked to my son who farms in Nebraska and runs a small ranching/feedlot. He told me they just sold some old crock railers there for $0.78 to a local packer. Start smuggling.

[cowman]

Rusty: I suspect if a lot of guys opened up their walletts, there wouldn't be anything there, but you are right that people need to make some sort of effort or throw in the towel.
I also suspect this decision is going through a whole lot of heads right now? What is the average age of cow/calf producers? I believe the average age of Canadian farmers is something like 57 so maybe that would be a good number to consider likely? So by the time the average guy hits 59 they might have a plant up and running and hopefully some profit back in the business?
In any business a person has to have a reasonable expectation of a decent profit somewhere down the road? Even Cam Ostercamp said the profit level was very poor pre-BSE? I believe he quoted something like $50-$75/cow? And basically he wasn't very far off the mark?
Now even 100 cows is a whole lot of work and takes a whole lot of time? Fencing, feeding, calving...even checking the darned things everyday! I mean if you take Cams top price that comes to $7500/year! On a $140,000 investment...just in the animals!
How much are you getting paid now?
There comes a time in everyones life when they have to decide if they want to keep doing the thing they have been doing all their life? It happens to everyone...the doctor, the lawyer, the farmer, even the politician! I would suggest there should be a lot of 59 year olds asking themselves if they want to keep doing this? Maybe take sometime to smell the roses and enjoy life before they are dead?

[rsomer]

The profits on simply killing and packing an animal pre BSE were about $50-$75 per head. The real money however was in adding value through branded beef products that offered convenience and guarantees of quality and taste. A producer owned packing plant would need to capture some of that opportunity to realize the full potential of the producer owning his animal further along the value chain.

I would not think producers should be considering investing in a packing plant simply because they would be expected to be hugely profitable once the market begins to function normally. The benefit I see is that it allows producers the opportunity to sell into the more stable boxed beef market or better yet the value added branded beef market instead of the volatile and unpredictable fat cattle market. The packing plant investment could be viewed as a marketing tool or maybe just another piece of machinery that is required to be profitable raising cattle, just like a stock trailer or loader tractor. I see the producer owning a share in a packing plant in the future as something that is required to be in the cattle business. There is simply no long term future in continuing to feed fat cattle to sell to Cargill and Tyson Foods. That much is certain. There is however a future in capturing more of the profit potential of the beef product through retaining ownership further through the value chain and adding value to our production in the form of a branded beef product that allows a fairer share of the value and profit to flow back to the producer/owner.

BFW: It is in the industry’s best interests to get through this crisis with as many producers still in business as possible. And that means we need to get the border open as soon as possible. The industry will move towards a producer owned packing plants out of necessity for the future. The present crisis merely highlights and focuses our attention on the problem of foreign ownership of our packing plants. However the problem of foreign owned packing plants existed pre BSE and the need for a Canadian packing plant industry will certainly still be there after the border opens.

Cowman: You raise an interesting point when you mention the beef producers investment in a cow. The sum total capital investment of Canada’s primary producers in cows, land, equipment is huge in comparison to the capital investment of Tyson Foods and Cargill. I quickly calculated a minimum of $50 billion dollars producers investment all told. The packing plants versus the producers is a David and Goliath story only the packers are the little guy when compared the capitalization already in the hands of the average producer like you and I. Primary producers can justify further capital investments in packing plants as it offers them price stability, risk management opportunities not to mention profit potential.

[cowman]

Rsomer: I can agree with the idea of investing in packing facilities if there is a reasonable expectation of profit. Especially for the younger farmer who intends to be in business for quite a few years. I will add,however, it needs to have a solid realistic business plan that considers all the likely scenarios...the bad as well as the good? The chances of failure are very real!!! No one should go into this thing wearing rose colored glasses?
I truly doubt that any group will convince cattlemen to invest money out of their own pockets(in a meaningful way). And I get antsy when any group suggests we use a mandatory checkoff to pay for it? Is this still a free country or not? Now if it was a deal like Red Country, in PEI, got I think it could fly? $20 up front, "forgivable loan" for the other $40, for each animal hook? Why is it a province like PEI can swing a deal like that but out here we require $200 or better just to get a study done? Something isn't quite right here? Maybe we need to go down to PEI and hire those boys to come out here and set something up for us out here? Because they sure seem to have the answer?

[greybeard]

I know guys that have $30,000 stock trailers and $120,000 loader tractors .Did they need a solid business plan for that? Rsomer,your right on.
Consider if instead of the stock trailer the money was in a boxed beef plant today.

[rusty1]

"There is simply no long term future in continuing to feed fat cattle to sell to Cargill and Tyson Foods."
Bang on rsomer
I don't understand what's so hard to figure out cowman.
Someone told me not long ago that a cow/calf's capital requirments are $3000 per head. The feedlot capital requirments is $300 per head and I know our capital cost is going to be under $200 per head.
The targeted Return On Investment (ROI) pre BSE has been between $30 and $40 per head. That's a return of between 15% and 20%. I'll just bet that's better than you're cows are bring you and alot better than the money you've got in RRSP or on savings.
And that says nothing of the benefits to you to have another buyer at the ring for you're fats. Or the benefits of the premiums you should be getting paid for you're quality cattle.
Now we may as well quite pinning over the fact that we need a plant "right now". We all know that can't happen. So lets put some energy into making it happen ASAP.
The BIGGER issue is that if we (producers) don't, the multi-0nationals will. Then you might as well sell out and go get some R&R time or become a "surf" of theirs. We will lose our birth right.